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Dealis subject to regulatory approval

Western Digital is one of the largest firms in the traditional hard drive manufacturing realm. Other notable companies in the HDD market include Hitachi GST and Seagate. Western Digital has announced that it has entered into an agreement to purchase Hitachi GST and combine its operations.

The deal was announced today and will cost WD about $4.3 billion. The transaction will be paid with $3.5 billion in cash and 25 million WD common shares valued at about $750 million. Hitachi will also get to place two representatives on the WD board of directors. The stock will mean that Hitachi Ltd will own about 10% of all outstanding WD stock.

The deal still has to get regulatory approvals and is subject to other customary closing conditions as well. WD will take out $2.5 billion in new debt to pay the cash portion of the deal. According to WD, it expects the purchase to immediately start contributing to its earnings per share on a non-GAAP basis after excluding the acquisition expenses, restructuring charges, and other costs.

The merged companies will continue to operate under the Western Digital brand and will continue to be headquartered in Irvine, California. WD CEO will remain John Coyne and the COO will be Tim Leyden with Wolfgang Nickl as CFO. There are no changes in the WD senior staff. Hitachi GST president and CEO Steve Milligan will move to WD as president reporting directly to CEO Coyne.

"The acquisition of Hitachi GST is a unique opportunity for WD to create further value for our customers, stockholders, employees, suppliers and the communities in which we operate," said John Coyne, president and chief executive officer of WD. "We believe this step will result in several key benefits-enhanced R&D capabilities, innovation and expansion of a rich product portfolio, comprehensive market coverage and scale that will enhance our cost structure and ability to compete in a dynamic marketplace. The skills and contributions of both workforces were key considerations in assessing this compelling opportunity. We will be relying on the proven integration capabilities of both companies to assure the ongoing satisfaction of our customers and to bring this combination to successful fruition."

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RE: Just hope this doesn'thave a negative effect
By CZroe on 3/7/2011 11:44:07 AM , Rating: 3
I've had multiple drives fail from every manufacturer. I, too, was "bitten" by IBM's "Deathstar" fiasco many times and still have a non-functional IBM Deskstar 60GXP around to prove it. Even so, I greatly prefer Hitachi drives to Western Digital. Hitachi and IBM never resolved the 60 and 75GXP issues to my satisfaction, but they certainly corrected it for future products. They do seem to be a bit more fragile than other brands (DON'T DROP IT!) but I have owned 25 of their top-of-the-line drives in the last 7 years and have only had random failures from other manufacturers. That's not to say I haven't had failures with Hitachi drives since, like when my nephew yanked on a cord during a file transfer (external drive came crashing down) or when a neighbor kicked his computer, but they have other more direct causes. I've had Toshiba, WD, Fujitsu, Samsung/Trigem, Seagate, all fail randomly multiple times in the same time frame. Now that Hitachi uses accelerometers to park the heads in mobile drives, I rely on them more than ever.

By myhipsi on 3/8/2011 9:44:13 AM , Rating: 2
Funny, I still have a fully functioning 60GXP in one of my office PCs. My overall experience with HDD manufacturers have been lucky I guess. I've had at least 30 HDDs from Maxtor, Seagate, WD, Hitachi, and Samsung over the years and have had absolutely zero fail on me. (knocks on wood) :)

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